How does this expansion compare to recent route additions by rival carriers such as American, United, and JetBlue?

Southwest’s new Knoxville‑to‑Memphis‑to‑Nashville “volunteer‑state” triangle and the San Diego‑terminal expansion adds a third Tennessee market, but the net capacity lift is modest – roughly 10‑12 % of its 2024 Q4 capacity, versus the roughly 20‑30 % incremental seats that American, United and JetBlue have added in the past six months on primary‑hub corridors (e.g., American’s Dallas‑Chicago‑Mexico, United’s Denver‑Seattle‑Mexico, JetBlue’s New York‑Boston‑Caribbean).

Fundamentally, Southwest is still trading at a premium to the “big‑four” (≈ 30 % above its 5‑yr average P/E) because its balance sheet remains strong (low‑debt, > $5 bn cash) and its “point‑to‑point” model is less exposed to hub‑congestion risk. The rival carriers, however, are using route‑additions to fuel revenue‑growth targets that underpin their higher‑multiple valuations, while also pressuring yields with deeper‑discount fare structures.

Trading implication: The Knoxville addition is unlikely to move Southwest’s top‑line in the near term, but it does signal a willingness to capture underserved secondary‑city traffic – a niche that can generate incremental ancillary revenue and protect market share against the “big‑four” expansion spree. For a short‑term play, the stock’s recent 2‑month uptrend (≈ 5 % above the 200‑day SMA, still below the 20‑day EMA) suggests limited upside unless the airline announces a broader secondary‑city rollout. Conversely, the “big‑four” stocks are more sensitive to macro‑fuel and labor‑cost headwinds; any further aggressive route‑growth could amplify earnings volatility. A relative‑strength trade—long Southwest, short a rival (e.g., United) – could capture the upside of Southwest’s stable cash‑flow and the downside risk of the larger carriers’ higher cost exposure.